Rodney Lawrence will be released from custody in lead-up to trial for murder of Elizabeth Dixon

A HUNTER man charged with the murder of a woman more than three decades ago has been granted conditional bail with a court noting there is an absence of forensic evidence to incriminate him.

Rodney Lawrence, 66, is charged with the stabbing murder of Elizabeth "Betty" Dixon, 31, whose body was discovered in her car in bushland at Ashtonfield in April 1982.

The Northern Irishwoman had been tied up, suffered 27 stab wounds and head injuries consistent with being struck with a blunt object.

Mr Lawrence has pleaded not guilty to the murder and the alternative charge of being an accessory after the fact.

During a release application in the Supreme Court on Wednesday the court heard Mr Lawrence has consistently maintained his dead father-in-law was the culprit.

On Thursday Justice Elizabeth Fullerton granted Mr Lawrence strict conditional bail, including that he live with his sister and a number of people deposit a combined total of $72,000 surety.

Justice Fullerton said the Crown case is based on the inconsistencies in the accounts he has given to police and to his son about his movements at the time of Ms Dixon's death.

Mr Lawrence's barrister Chris Bruce SC had told the court that Mr Lawrence had consistently maintained the "principal offender" was his father-in-law, William Phillips, who had since died, and who Mr Lawrence said had threatened him.

Mr Lawrence's son had recalled a 2002 conversation when his father told him Mr Phillips had killed Ms Dixon and Mr Lawrence had later assisted him "under duress", Mr Bruce said.

ARREST: Rodney Lawrence being led away by detectives following his arrest for the murder of Elizabeth Dixon.

Another judge had denied Mr Lawrence bail in December 2015 but Justice Fullerton said Mr Lawrence will have been in custody for two years if kept on remand before his trial starts in November.

The lawyer for the Crown opposed bail, alleging Mr Lawrence had told lies and was the "perpetrator" despite maintaining his father-in-law was the culprit.

The court also heard there was concern Mr Lawrence would attempt to interfere with his son to "deter him from giving evidence at the trial".

But Justice Fullerton said any risk could be mitigated by strict bail conditions including that he be of good behaviour and report daily to police. She noted he has long-standing problems with alcohol.

"He's a grown man with no prior criminal record; he has given various accounts its true [but] he will understand more than anybody the need to comply with strict conditions," she said.